The Changing Lending Landscape
A comprehensive study tracked over 2,000 businesses with annual revenues between $500,000 and $10 million that sought financing in the past 18 months. While traditional banks might offer equipment financing, a closer look at the cost of capital reveals non-bank lenders are very competitive, with better services.
- Speed to funding: Non-bank lenders averaged 7 days from application to funding, compared to 32 days for traditional banks
- Approval rates: 67% for qualified applicants at non-bank lenders versus 41% at traditional banks
- Documentation requirements: 78% fewer documents required by leading non-bank lenders
- Flexible structures: 84% of non-bank lenders offered custom repayment schedules versus 23% of traditional banks
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Personal Guarantee Explained: Protecting Your Credit While Building Business Credit
When setting up your equipment finance program, most companies will sign a personal guarantee. This is standard in most small business financing and simply means you are backing the agreement personally in case the business cannot fulfill the obligation.
However, this financing will not report to your personal credit and does not impact your personal credit score—unless there is a serious default. It remains separate from your personal credit file.
The real benefit is that it will help your company build its own business credit profile, which can open the door to larger financing opportunities in the future without needing a guarantor.